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EHedger Report

RSS By: Dustin Johnson

Dustin works with a wide net of large producers throughout the Midwest. His analytical market approach and objective hedge strategy development is specific to the needs of every individual.

Closing Grain Commentary 7-1-10

Jul 01, 2010

 

Today the grain markets had another strong session as corn/wheat have follow-through buying from yesterday’s report. The USDA report is still the main driving factor behind this sharp rally. Dec Corn settled another 11 cents higher today at $3.84. Dec wheat was also sharply higher at $5.24 ¼.  The outside markets were conflicting with equities/energies weaker and the US dollar very weak.  Export sales for corn were 649,700 for this year and 76,500 for next (lower end of estimates.) 

 

The market was expecting the June USDA Corn Acreage to increase to 89.3 but to the surprise of the market it actually showed a decrease in acreage to 87.872.  This combined with a reduction in Corn stocks to 4.31 billion bushels (expected about 4.613) is the reason the market has rallied 40+ cents off of the lows on Tuesday.  Today was the first of the month/first of the quarter.  We are using this rally to rev up our sales for 2010 corn.  If you have not placed orders for the new recommendations please call your broker to discuss these strategies and how they pertain to your production. The forecast remains favorable for growing conditions. Dry weather is expected through the weekend with showers expected early next week for much of the Midwest.  Weather throughout the delta and also in China still needs to be monitored. 

 

The USDA report was mixed for beans as we saw a higher than expected acreage number but a lower than expected stocks number.  The November contract tested $9 again today but managed to rally back to settle at 905 ½.  In our opinion, the fundamentals remain bearish for soybeans and rallies should still be sold. With a large South American crop we could continue to see thin export sales.  If you are not caught up on sales and need to get orders placed, please give us a call to discuss the available strategies.

With the US Dollar down over 1000 today, wheat didn’t have much trouble staying sharply higher on the day. 

 

Today wheat finished up another 17 ¾ cents today at $5.24 ¼ December.  Wheat has been supported by the wheat/corn feed ratio. The USDA numbers showed higher acreage than expected as well as higher stocks than expected, suggesting a lower trade on normal trading days.  But with how cheap wheat has been compared with corn, this ratio kept wheat well supported over today and yesterday. Also, we have seen the basis improve tremendously for the soft red wheat.  This could be a result of the huge carry trade built into the market as everyone wants to hold cash wheat to store for future delivery.  We have seen strong export sales the last couple of weeks, another positive sign in a bearish market.  The recent corn break has been a large factor in wheat’s price drop.  If corn has follow-through buying from this report we could see wheat follow higher as well. From a producers standpoint if you are able to store your wheat, we feel selling deferred futures to capture the carry is a wise play in this market.

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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

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